5 Benefits of Renting First Before You Buy a Property

Today, we’re gonna talk about a very, very important stage in your life when you are deciding to actually settle in a property of your own. Now, there comes a stage when you usually wanna rent first before you buy so you that you can be sure but some would come and tell you that renting would be a waste of money and it could not be beneficial for you because you’re paying for something you don’t really own. Is this really true? And guess whereas in actuality, we are actually paying for the use of the space for the particular month or year that you’re using it. And it is really wasted? How can it be beneficial for you? Today we’re gonna talk about this particular issue most especially that we know that it affects a lot of Filipinos and of course foreigners alike because the property values in the Philippines have been going up in the past few years and it could be quite difficult to have or challenging to buy your own property, because of the prices have gone up and also the inflation rate have gone up. So, purchasing power is quite difficult and there are some ways and means to actually do this in the smartest way possible and I think renting before buying also has its own advantages.

So, we will be discussing a few of them to you so that it could, you know clear and it give you a sense of direction as far as how this should be dealt in the smartest way possible.

#1

The first advantage of renting first before buying a property is it generally affords you more space, when you are actually renting a property, you’re actually getting more space for your buck. Because say for example, if you choose to rent a 3-bedroom apartment right now in the city, a condo for that matter and you’re renting it for as X-amount number of lease rate, that usually is anywhere between 3%-6% of the current market value of the property. So, just to give perspective to this particular computation if you’re renting a 3-bedroom property say for example in one of the premiere condominiums in the city and you’re leasing it for a Php 100,000 on the monthly basis so that is generally around 5% or 6% of the current purchase price of that particular unit.

So, if you are in the crossroads whether to buy right away or lease first and try it if you have some other goals that you wanna conserve your money for and you don’t really have to spend that much to be actually able to enjoy that kind of space if you want to enjoy the 3-bedroom unit you can just simply rent it first just so you can see also if you like the area for a year it will only cost you 1.2 Million that’s a world of difference!

So, when it comes to renting it can actually get you more space that you can use for the time being that you need it, this also goes to when you’re renting properties when you actually renting a bigger home and say for example in some areas you could actually rent a bigger home already at Php 35,000 to Php 50,000 per month depending on where but the floor area in the general lot is actually gonna bit bigger than a 100 square meters for sure. And this will give you an opportunity to enjoy and experience this large amount of space without needing to come out with the full amount and pay for it right now if you are buying it, or wait for like 7, 8, 9, 10 years when you can already afford it and then enjoy it later on.

Renting a property can actually give you an opportunity to enjoy a larger space today without having to let you wait for a long time before you’ll able to enjoy it.

#2

The second advantage since you are only spending so much is, it gives you a break so that you can prepare or save up for the property of your dreams. Since you are only spending so much for the useof space and since you are still deciding where you can actually build your dream home or get your dream condo that you really like the penthouseproperty that you really wanna own.

Renting a property since it’s not as front heavy as far as investments is concerned and is actually quite laidback cause all you have to do is to settle the monthly rent, it gives you a break so that you will be able to save up for the property of your dreams. So, not only are you enjoying the large space that you normally wouldn’t have had the chance to enjoy now, if you bought it right? Or if you can buy it right away but will be like spent. You will be able to enjoy bigger space at the same time it will let you have that break that you need so that you’ll be able to have an opportunity to save up for the property of your dreams or simply for the property that you really like. Because not all the time and at any point of time do, we have all the resources to purchase something that we like most especially when it comes to a property, which is one of the biggest purchase decisions of your life that you can make and there are things that we have to save up for. So, renting a property will give you that kind of break and momentum so that you will be able to save up for the property you really like.

#3

The third advantage of renting a property before buying one is it let’s you try-out an area before you actually invest in it.

Sometimes when you actually do a decision most especially when it’s a big purchase we tend to buy a property and then sometimes the plans changed or we eventually find out that the property is not really fit for us, but the problem is when we already bought the property you already top-heavilyinvested upfront into the area and you don’t have a choice then you have to move to property oh well of course you can’t move it, what I’m saying is you have to sell it so that you will be able to move faster, better in so many ways, and the problem in this kind of scenario is that you will have another expenses in between.

Now, renting a property will actually give you an opportunity to try-out the area if it works with your lifestyle, is your work near or the kids school near, is your friends gonna be able to visit you and see you in the area which actually have time for yourself, are the commercial areas nearby, are the banks nearby or anything you might need to live your life properly in the way you want it. It gives you the opportunity to actually try out and see if it’s for you for less the cost.

Now, it also gives you an opportunity to test the space if you’re only renting a one bedroom and you’re okay with it then probably you can save up and buy one bedroom unit or if otherwise you’ve rented a one bed and you feel that it’s a little bit small, it actually gives you the opportunity to save up for a bigger property while you’re renting a smaller unit for the meantime. It doesn’t have to be always that case, that you’re renting forever, right? You actually have an opportunity to change this as time goes by and when you buy a property as I’ve said in my previous blogs, it’s usually a lifestyle design and you actually have to plan this depending on how you wanna live your life and the best way possible for you as far as your work, school, or kids or family is concerned.

Now, when it comes to renting and trying it out you actually have an opportunity to try the area, to try the space needs, and try the lifestyle that will best work for you before you finally commit to investing the 7 or 8-figure property that you really, really like.

#4

The fourth advantage of renting a property is, it has less liabilities compared to owning a property.

Now, what do I mean by this? Of course, as you know we’ve always been advising you to have your own property because it’s a way of a good form of savings for you that you can actually liquidatelater on and it compounds in values through time. But for this particular advantage that we are discussing here, since you are only renting, you will be given a liability that concerns a home owner.

Say for example, the roofs got broken, all of the windows got stashed this could be a five or six figure repair and if you are renting the property and it’s not your fault, and it goes beyond the threshold of repair that has agreed on your lease contract that is normal if you are a tenant you actually have the certain threshold that wherein you’re supposed to be responsible but for the bigger ones it supposed to be the landlord.

Say for example that happened, and there’s a pending five to six figure bills to make the house repair. If you are only leasing you don’t have to worry about it, but if you’re a landlord or if you are the owner of the property definitely, you’re gonna have to deal with a lot of these repairs and maintenance cost because as a property owner it usually doesn’t end to buying a property.

There are maintenance dues that are required to make the property nice and to make sure that the property upkeepis quite good.

Now, if you are only renting, of course you’re gonna take good care of the property but you won’t usually have as big liabilities from time to time.

So, you actually haveupfront liabilities if you’re not ready for these kinds of things to maintain upfront, when it comes to owning your own property but probably leasing for the mean time could be a very good idea.

Of course, it doesn’t mean that we don’t have to take care of the property, definitely we have to take care of the property most especially if it’s not yours and you’re only renting, but as far as major repairs are concerned most especially if it’s not cause by you, it is cause by naturally by something that’s unforeseen and you don’t own the property normally the owner really takes care of it. Of course, this is highly depending on your contract of lease, however in most cases if the repair is quite significant and is inherited to the property that should be on the owners account.

So, as far as the advantage of maintenance is concerned when you’re leasing generally you have less liabilities as compared to owning your own property.

#5

The fifth advantage of leasing a property first before buying one is, freedom of mobility.

Nowadays in this fast-changing world, there’s a lot of opportunities that are available almost everywhere and at one moment you may find yourself working in the city sometimes in another area and then if you get promoted you can be assigned to another area. And if it’s gonna be for a forward movementand increase in income and betterment of your own family as a household unit, then why not?

If you are able to invest in the property, then you’re gonna have to leave it and live somewhere else and you’re still have to worry about your property that you invested in, if you bought it,remotely. Whereas if you are only renting for the meantime and the opportunities come, you’re actually very quickly mobile and you can, you know, you can just move to anywhere. You don’t have to worry about anything because you’re not actually invested in the area you can move to wherever the opportunity is. But if you are actually maintaining it as a rental property where you can actually have returns that’s a different story.

What we simply discussing here is if you just gonna have money to buy property and you’re saving up for it and you wanna lease first and if you see an opportunity, it could be better for yourself and for your family. If you’re only renting first before you buy the property where you finally decide where to settle, you can settle there, this particular scenario of renting first could actually give you a lot of benefits because it can give you the flexibility and easy mobility and you can actually move wherever the opportunity is so that you can catch it.

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So, what did we learn today? Today we learned that renting a property first before actually deciding to buy one could actually have a lot of benefits for you.

I hope today’s topic was able to give you a better idea about handling your finances when it comes to renting or buying is concerned. Thank you and we look forward to seeing you again here.